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Lately there
have been a lot of stories in the mainstream media where some poor, ignorant
saps were duped by companies using predatory lending practices. I don’t
think anybody questions the fact that unscrupulous lending practices exist.
In my view, though, the vast majority of folks that are up upside-down on
their mortgages knew exactly what they were getting into. These folks bet
the farm – literally – that appreciating real estate values would make their
loans solvent. Ironically, this is the same mindset that prompted the
lenders themselves to underwrite the risky loans. After all, subprime
mortgage lenders like New Century Financial Group were simply borrowing the
money from another upstream lender. Whenever there’s any kind of “bubble” in
the economy, a similar series of events will occur in one form or another. |
